Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: Stuart Williams and I'm sitting in for our usual host,
Speaker 1: James Kirby whilst he's taking a well earned break now.
Speaker 1: James would normally introduce me as a property friendly financial
Speaker 1: advisor and I'm also the host of my own podcast, Investopoly,
Speaker 1: and I'm absolutely thrilled to be hosting today's episode. Last
Speaker 1: week James interviewed Louis Christopher from SQM Research and they
Speaker 1: took a deep dive into the Australian property market from
Speaker 1: a high level perspective. It was a really fascinating episode
Speaker 1: and the sort of key highlights were that Adelaide, Perth
Speaker 1: and Brisbane are experiencing very impressive annual growth running at
Speaker 1: double digits, Sydney is a pretty balanced market around five
Speaker 1: percent growth, and Melbourne's the outlier slightly in decline in
Speaker 1: terms of property prices. Since last week's episode went to air,
Speaker 1: the Real Estate Institute of Australia announced that housing affordability
Speaker 1: has declined to its lowest point on record since it
Speaker 1: started monitoring this in nineteen ninety six. The average loan
Speaker 1: repayment now accounts for forty eight percent of median family income,
Speaker 1: obviously thanks to higher property prices and higher interest rates.
Speaker 1: So back to last week's show, Louis touched on a
Speaker 1: couple of other observations. Firstly, he said that units are
Speaker 1: starting to outperform houses, and he actually made the comment
Speaker 1: that that tends to happen in slower markets. Another very
Speaker 1: interesting point, which I'll ask my guest about today, was
Speaker 1: that vacancy rates, rental vacancy rates in the regions are
Speaker 1: starting to decrease again. Obviously, during COVID we have had
Speaker 1: a very tight rental market and vacancy rates were very
Speaker 1: very low. Of course, then post lockdown they tended to normalize. Well,
Speaker 1: they're trending downwards again, which is a bit of a surprise,
Speaker 1: to be honest. Anyway, if you missed the episode last week,
Speaker 1: it's certainly worth listening into. But today, what I wanted
Speaker 1: to do is build on the information that we talked
Speaker 1: about last week, and I want to focus in particular
Speaker 1: on the spring property market, which kicked off this this month.
Speaker 1: It's the peak property season, if you like. I want
Speaker 1: to talk to my guest about what that means for sellers,
Speaker 1: what it means if you're a buyer, particularly noting that
Speaker 1: markets are at different points of the cycle, and I
Speaker 1: have a perfect guest today to help us do that.
Speaker 1: He's a friend of the show, he's been on before.
Speaker 1: He's a very experienced buyer's agent and owner of Wakeland
Speaker 1: Property Advisory. Jered McKay. Welcome to the show.
Speaker 2: Thanks very much having me, Stuart, my pleasure.
Speaker 1: So I'd like to start with what is the spring
Speaker 1: property market mean for us? Is it just an increase
Speaker 1: in property listings? And why Spring? Why is that the
Speaker 1: peak period in the property market?
Speaker 3: Troad.
Speaker 2: Yeah, it's a good question.
Speaker 3: Look, I mean the spring market's always in terms of
Speaker 3: supplies where things really start to ramp up, and I
Speaker 3: think that goes back to people feel their properties, probably
Speaker 3: particularly family homes, look best during spring. The garden starts
Speaker 3: to really come into bloom and a lot of flowers out,
Speaker 3: that sort of thing. But also we're coming out of colder,
Speaker 3: a wetter, more miserable months, particularly for us down in
Speaker 3: the Southern States, and so the property just presents well
Speaker 3: and people feel better about themselves at this time of
Speaker 3: year as well, so it tends to build from there.
Speaker 3: We also find that from a seller's perspective, there's a
Speaker 3: bit more competition because there's been a fair amount of
Speaker 3: pent up demand during the winter months where there hasn't
Speaker 3: been as much choice around.
Speaker 2: It can start to.
Speaker 3: Bring a few more buyers out into the marketplace as well.
Speaker 3: So you can quite often see a bit of a
Speaker 3: spike in values coming out of that winter period sort
Speaker 3: of late August and into September, and as the year
Speaker 3: builds or the spring it builds, there's more and more choice.
Speaker 2: Available as well.
Speaker 1: Yeah, and of course, as I touched on in the introduction,
Speaker 1: we've got different markets at different stages of the cycle
Speaker 1: around Australia. Some are very hard markets, particularly Perth for instance,
Speaker 1: where days on market is very contracted. If you've got
Speaker 1: a property to sell, it will sell very quickly. And
Speaker 1: the other end of the scale is Melbourne of course
Speaker 1: that's a little bit of a softer market. So how
Speaker 1: do those different markets kind of react to that uptick
Speaker 1: and in supply.
Speaker 3: Look, I mean it's in some ways there's similarities to
Speaker 3: it that Obviously, an increase in supply can quite often
Speaker 3: lead to either market starting to flatten if they've been
Speaker 3: on the increase. But if there's a depth of demand
Speaker 3: that can eat up that increase in supply. Then it
Speaker 3: can sometimes just fan the flames and it can make
Speaker 3: it kick on because it just gives buyers more and
Speaker 3: more confidence that there is a depth of demand and
Speaker 3: if they don't do something sooner or later, then they're
Speaker 3: going to get left behind and going to be playing
Speaker 3: catch up, which is not a good thing to be
Speaker 3: doing in the property sense when the market is moving,
Speaker 3: but when it's start to decline, it can also be
Speaker 3: self fulfilling in that regard that people are seeing it
Speaker 3: go down and then if there's an increase in supply,
Speaker 3: and typically in a softening market, the main issue is
Speaker 3: that the demand isn't there, and so with the lack
Speaker 3: of demand and increasing supply, it just continues to push
Speaker 3: things further and further down. So it's a really interesting
Speaker 3: time of the year. We do always see supply pick up,
Speaker 3: and if there's not a depth to the demand then
Speaker 3: it can see some significant changes.
Speaker 1: Yeah, and so what are you seeing sort of around
Speaker 1: the country and obviously particularly in Melbourne that where you
Speaker 1: operate in terms of those listing numbers, does it look
Speaker 1: like there's a lot of stock coming online?
Speaker 3: And yeah, it does I mean, not necessarily right across
Speaker 3: the board, but I mean I looked at recently supply
Speaker 3: numbers this year for Victoria, particularly compared to last year,
Speaker 3: and we're certainly up on what we were this time
Speaker 3: last year. And I think if you look at the
Speaker 3: clearance rate in Victoria at the moment, it's hovering around
Speaker 3: the early to mid sixty percent mark. Now, if that's
Speaker 3: the case at the start of spring, when typically there
Speaker 3: is a bit more demand around by the time you
Speaker 3: get to the end of the spring market, where a
Speaker 3: lot of buyers have left because they've purchased, but many
Speaker 3: of those buyers then need to sell, so the supply
Speaker 3: is still quite often quite good through November and into December.
Speaker 3: With a lack of demand, I'd expect to see that
Speaker 3: clearance rate come back, and I think it will probably
Speaker 3: be in the early to mid fifties by the end
Speaker 3: of the year, which is certainly a buyer's market. Now,
Speaker 3: you look at, as you said, the other capital cities
Speaker 3: sort of Adelaide and Perth, particularly in Brisbane as well,
Speaker 3: I would expect them to keep kicking as the market
Speaker 3: goes because there is still depth to the demand in
Speaker 3: those areas. So even with the supply picking up, I
Speaker 3: think that there'll still be strong interest there. Sydney is
Speaker 3: a bit more interesting. I think that they're probably more
Speaker 3: in a level ish type market. You mentioned five percent
Speaker 3: growth this year, but if it's more of a plateau
Speaker 3: there on a level then they could start to come
Speaker 3: off a little bit. I don't think to the same
Speaker 3: extent as Melbourne, but it certainly could start to come
Speaker 3: off a little bit.
Speaker 1: I was talking to a buyers hing yesterday from Perth
Speaker 1: and he was saying that the listings are really tight,
Speaker 1: not necessarily reflecting in volume. His observation was that volume
Speaker 1: is pretty healthy, it's just selling so quickly that the
Speaker 1: available stock is pretty tight.
Speaker 2: So if we're.
Speaker 1: Thinking about then getting into the property market during this
Speaker 1: sort of spring period, what advice would you have for
Speaker 1: buyers with respect to that? And I guess that there's
Speaker 1: probably maybe sort of two different markets. We want to
Speaker 1: think about the market that's really hot and challenging and
Speaker 1: buoyant versus a market that may be softening with more
Speaker 1: supply than there is by a demand.
Speaker 3: Being prepared and doing your due diligence no matter whether
Speaker 3: you're in a competitive market or a soft market, is
Speaker 3: always going to be the most important thing, and I
Speaker 3: think you need to.
Speaker 2: Make sure that you're ready.
Speaker 3: In a hot market, you need to be ready to
Speaker 3: react because, as you said, Perth being the example, things
Speaker 3: are moving really quickly.
Speaker 2: If you're not.
Speaker 3: Ready, you'll get left behind, and you'll keep getting you'll
Speaker 3: keep missing out on properties. But in a soft market
Speaker 3: as well, you still need to be ready to take
Speaker 3: advantage of something that might be perceived there's being good value,
Speaker 3: so if you leave it for too long, there'll still
Speaker 3: be other buyers around that might take advantage of that.
Speaker 3: So I think, no matter what, being prepared and having
Speaker 3: yourself organized, whether it's solicitors, financial advice, building inspectors, all
Speaker 3: that sort of thing, being prepared and ready to move
Speaker 3: is really important. I think understanding technical value versus market
Speaker 3: sentiment when assessing property values is a really important thing,
Speaker 3: both from a growth market but also from a softening market,
Speaker 3: because when you're in the growth market, understanding market sentiment
Speaker 3: and being prepared to take a step in front of
Speaker 3: it is really important. If you're alling on sales that
Speaker 3: have occurred sort of even a month or two ago,
Speaker 3: and not taking into account the market's kicking week on week,
Speaker 3: you won't get in and you'll get left behind, or
Speaker 3: you'll get caught buying something that's of a secondary nature
Speaker 3: and isn't going to work longer term. So and that's
Speaker 3: a real can be a really difficult thing for buyers
Speaker 3: to get their head around in terms of setting a
Speaker 3: new benchmark and being prepared to pay that mark. Otherwise
Speaker 3: you just won't get into the market. I think from
Speaker 3: a buying perspective and a softening market, I think making
Speaker 3: sure that you're still buying a high quality asset is
Speaker 3: really important and not getting caught up on I'm being
Speaker 3: too cute. Sometimes in a softening market, people can be
Speaker 3: a little bit too smart by half and then end
Speaker 3: up missing out on things I only to look back
Speaker 3: and think I really should have taken advantage of that.
Speaker 3: So there's different mindsets when going into that sort of market,
Speaker 3: and I think it's really important to understand what you
Speaker 3: need to do.
Speaker 1: Yeah, so if you're in a really soft market looking
Speaker 1: for a bargain property, something that's selling for well below
Speaker 1: what you think it's technical or intrinsic value, are you
Speaker 1: saying if you're going to take that approach that maybe
Speaker 1: you'll be too cute for yourself, and you'll miss out
Speaker 1: and some opportunities.
Speaker 3: Not necessarily if you can still take advantage of that.
Speaker 3: But you just don't want to be too cute. So
Speaker 3: if you leave it there too long and you try
Speaker 3: and get it for too much of a bargain, if
Speaker 3: it's the right property for the right reasons, obviously, no
Speaker 3: one wants to overpay, and we all want to buy
Speaker 3: it for as little possible. But if you sometimes you
Speaker 3: can be talking five or ten thousand dollars in the
Speaker 3: scheme of buying a property worth in excess of a
Speaker 3: million dollars, don't be too smart and not be prepared
Speaker 3: to pay that. Because if you take a step back
Speaker 3: and you look at it in five ten years time
Speaker 3: and that property is worth well, hopefully double if it's
Speaker 3: over ten years, paying that extra ten to fifteen to
Speaker 3: twenty thousand dollars, you're not going to look at that
Speaker 3: and be too concerned.
Speaker 1: Yeah, and I want to ask you about the reverse.
Speaker 1: I guess how you behave in a much stronger market.
Speaker 1: But before we do that, in a soft market like
Speaker 1: Melbourne in this spring that you expect, do you think
Speaker 1: there'll be a lot of bargains out there.
Speaker 2: I think there'll be some good opportunities. Yeah, I do.
Speaker 3: I think because there's a lot of supply hitting the market.
Speaker 3: So I think from a buyer's perspective at the moment,
Speaker 3: if you are about in the softening Victorian market, that
Speaker 3: there could be some really good opportunities to be had.
Speaker 2: Yeah.
Speaker 1: Okay, So for those people listening today that really are
Speaker 1: contemplating getting into one of those hotter markets like Brisbane,
Speaker 1: Adelaide and Perth. In such a fast moving market, how
Speaker 1: do you assess whether you're overpaying? Of course, the prices
Speaker 1: are moving so quickly, that's the risk, right, No one
Speaker 1: wants to pay more than we really need to or should.
Speaker 1: How do we sort of navigate a market like that?
Speaker 3: So I think it's important to look at it from
Speaker 3: a historical perspective. And when I say historically, I don't
Speaker 3: mean going back years and years. I'm all mean looking
Speaker 3: at the last three to six months and getting a
Speaker 3: clear understanding as to what similar properties have been doing
Speaker 3: and sort of monitoring and tracking that. So if you
Speaker 3: look back six months and you can see that a
Speaker 3: property sold for X dollars and then within three months
Speaker 3: it's selling for X plus two and then you get
Speaker 3: it and you can see a bit of a trend
Speaker 3: developing by the time you get to seeing the property
Speaker 3: that you're looking at.
Speaker 2: Okay, it's been.
Speaker 3: Moving month by this amount of money, I've got to
Speaker 3: expect that it could at least do that now compared
Speaker 3: to the sales that I'm considering. But might I even
Speaker 3: have to go a little bit further than that. And
Speaker 3: if you're confident, and particularly those markets that they are
Speaker 3: still got further to go in terms of their growth,
Speaker 3: then having the confidence to take that we call the
Speaker 3: step in front of the market, rather than taking a
Speaker 3: giant leap out in front of the market. We'll get
Speaker 3: you in and then you get the market to work
Speaker 3: for you rather than work against you.
Speaker 1: I'm putting you on the spot here, Jared, of course,
Speaker 1: But do you think that there's any just from a
Speaker 1: a median value level, do you think any of those
Speaker 1: markets are getting close to being fully valued?
Speaker 3: I mean, I don't know them as intimately as what
Speaker 3: others will, but I certainly think they're starting to get
Speaker 3: closer to But again, I think in a lot of
Speaker 3: circumstances that'll be getting to a point where they'll then
Speaker 3: start to Plateau. There's a lot of good fundamentals around
Speaker 3: all of those. I mean, we're always wary to a
Speaker 3: certain extent with Perth because it is so reliant on
Speaker 3: the mining sector, so it can be a little bit
Speaker 3: more volatile. But I think Brisbane certainly got some really
Speaker 3: good fundamentals to it. So I think even if it
Speaker 3: does get to a point where it might be at
Speaker 3: its premium for the moment, it's more likely to then
Speaker 3: just level off. It might come back a little bit,
Speaker 3: but then at some stage over the coming years it's
Speaker 3: going to kick again.
Speaker 2: Yeah.
Speaker 1: Okay, let's talk about it from in terms of the
Speaker 1: spree market from a seller's perspective. So for those people
Speaker 1: listening that are contemplating selling a property this spring, if
Speaker 1: they're doing so, they probably already started that process. But
Speaker 1: you know, what advice do you have. Obviously, if you're
Speaker 1: going to sort of term Melbourne as a buyer's market,
Speaker 1: then of course the implication is it's not a seller's market.
Speaker 2: Is that right? Yeah, Yeah, that's exactly right.
Speaker 3: So there's very much opportunities there at the moment from
Speaker 3: a buying perspective. So if you're looking to sell in
Speaker 3: that type of market, it's really important that you make
Speaker 3: your property stand out. I think from a seller's perspective,
Speaker 3: the big thing is to understand who you're going to
Speaker 3: be pitching your property to and therefore what do they expect.
Speaker 3: So if you're looking at it from a first home
Speaker 3: buyer or perhaps a downside that sort of thing, most
Speaker 3: of the time people are going to be looking for
Speaker 3: something that's ready to move in.
Speaker 2: Turkey's the typical.
Speaker 3: Phrase, So we want something that is and that's what
Speaker 3: we're seeing at the moment. Is probably the strongest sector
Speaker 3: of the market in a softer area like Victoria and Melbourne,
Speaker 3: is that there's concerns and weariness around dealing with trades
Speaker 3: and the cost of doing renovations. So having something that
Speaker 3: people can move straight into is definitely what the market's
Speaker 3: looking for. So if you're pitching towards that type of market,
Speaker 3: getting the property in that state so that it's ready
Speaker 3: to do that and spending a bit of money from
Speaker 3: a presentation perspective is really important. On the flip side
Speaker 3: of that, if you've got a property that's likely to
Speaker 3: be a development site or is likely to have the
Speaker 3: dwelling demolished and having a new building of some sort
Speaker 3: put on spending much money on the improvements is going
Speaker 3: to probably be a waste because you're not necessary. Most
Speaker 3: people are going to look at that and say, well,
Speaker 3: I don't need that, And if you go too far,
Speaker 3: they may look at it and say, well, now the
Speaker 3: improvements are adding too much value. So I don't want
Speaker 3: to be pitching towards that. So I think understanding your
Speaker 3: market is really important. I think understanding, particularly in a
Speaker 3: softening market and in certain areas, what's the best method
Speaker 3: of sale is really important too, because it's not going
Speaker 3: to be and Melbourn, obviously, as an example, in the
Speaker 3: soft market at the moment, is typically known as the
Speaker 3: auction capital the country, but that's not going to be
Speaker 3: across the board in a softening market. So in areas
Speaker 3: whereby it's possibly a bit more of a sometimes we auction,
Speaker 3: sometimes we don't. In the softening market, when you're out
Speaker 3: on some of the outer suburbs where the depth of
Speaker 3: demand may not be as strong, you may be better
Speaker 3: off considering a private sale or an expression of interest.
Speaker 3: And depending upon the need for sell, is there a
Speaker 3: market for an off market strategy and that might be
Speaker 3: something to consider as well.
Speaker 2: So method of sales.
Speaker 3: Really important in that scenario, and so selection of agent
Speaker 3: because you need to make sure you've got someone that
Speaker 3: knows and has got a good market share and so
Speaker 3: they can tap into that and you work for you
Speaker 3: in the best way possible.
Speaker 1: And so for those that own property in markets that
Speaker 1: are running quite hot, of course logic would tell us
Speaker 1: no point selling now if the market's going to continue
Speaker 1: to run. But how do you know is there any
Speaker 1: sort of signs? So if you held a property in
Speaker 1: a Brisbane or an Adelaide or a Perth, when do
Speaker 1: you know when is the right time to sell in
Speaker 1: terms to maximize value?
Speaker 3: Well, your personal motivation needs to be taken into account
Speaker 3: there as to what's the reason. So is it for
Speaker 3: it because you're looking to upsize an upgrade a home
Speaker 3: or downsize down grade a home, or is it an
Speaker 3: investment property that is at that.
Speaker 2: Point where you no longer require it?
Speaker 3: So I guess your first things first is what's the
Speaker 3: personal motivation and is there a strong need or want
Speaker 3: to sell? And therefore, if there is, then okay, let's
Speaker 3: look at when does that need to be immediate or
Speaker 3: does it need to be at some stage in the
Speaker 3: next three to six to twelve months, and therefore you
Speaker 3: can set up the timing around that. I think the
Speaker 3: most important thing once you've determined the need to sell
Speaker 3: them when is to then look at getting it the
Speaker 3: most exposure as possible. So, for instance, we talked before
Speaker 3: about method of sale well, selling off market I think
Speaker 3: in a really strong market is a real risk because
Speaker 3: you run the risk of not necessarily there's new buyers
Speaker 3: coming into the market all the time, and if you
Speaker 3: sell off market, doesn't matter what agent you've got, they
Speaker 3: could have the strongest market share.
Speaker 2: If they don't.
Speaker 3: If they're not dealing with every single new buyer that
Speaker 3: comes into the market, they don't know everyone, and you
Speaker 3: risk risk, sorry, leaving money on the table. So I
Speaker 3: think making sure you expose the property as much as possible.
Speaker 3: That doesn't mean going overboard with say two bedroom apartment
Speaker 3: in print advertising where you're not really going to get
Speaker 3: new buyers coming in, but it's understanding where your buyers
Speaker 3: are going to be looking and making sure you get
Speaker 3: as much exposure as possible, making sure it stands out
Speaker 3: because it's sometimes in a stronger market, the supply can
Speaker 3: start to lift and so there'll be more competition, so
Speaker 3: you need to have a bit more of an understanding
Speaker 3: as to how the best to make your property stand
Speaker 3: out in the marketplace.
Speaker 2: And I think that's really important as well.
Speaker 1: Yeah, that's really good advice, Jared, for both property buyers
Speaker 1: and sellers. And i'd like to reiterate your first bit
Speaker 1: of advice is being prepared, whether you're in a soft
Speaker 1: market or a very buoyant market. We helped to client
Speaker 1: just recently buy a property in Brisbane. They're in a
Speaker 1: position then to sign an initial contract with a thirty
Speaker 1: days settlement and because they were able to act very
Speaker 1: quickly and offer that short settlement, they were successful in
Speaker 1: buying the property. So it's always good to then think
Speaker 1: about what are the leavers you can pull other than
Speaker 1: price in order to get a deal done, which is
Speaker 1: really good. Okay, that's very interesting. We're going to take
Speaker 1: a short break and we'll be back with you. I'm
Speaker 1: going to ask Jared when we returned about regional markets
Speaker 1: and really what else these team's been working on. So
Speaker 1: we'll be back with you in a moment. Hello, welcome
Speaker 1: back to the Australians Money Puzzle podcast. I'm Stuart Wellams
Speaker 1: and I'm talking to Jared McKay, buyer's agent and owner
Speaker 1: of Wakeland Property Advisory. So at the start of the
Speaker 1: show we talked about how capital cities are fairing differently,
Speaker 1: and Jared gay the US some great advice to both
Speaker 1: buyers and sellers that want to operate in the spring market. Jared,
Speaker 1: I just want to change speeds now and really leverage
Speaker 1: off what Louis Christopher was saying last week. His observation
Speaker 1: were the rental vacancy rates are on the decline in
Speaker 1: the regions, and that actually really surprised me. So how
Speaker 1: are you seeing regions but behave or perform compared to
Speaker 1: capital city markets.
Speaker 2: Yeah, I agree to you. That surprised me as well.
Speaker 3: I would have, particularly with the way the capital markets
Speaker 3: are working in some of the regions at the moment.
Speaker 3: I was trying to after hearing that, I was trying
Speaker 3: to think of what may have been driving that, Whether
Speaker 3: or not it's because of the type vacancy rates in
Speaker 3: a lot of the capital cities and people are looking
Speaker 3: for affordable alternatives and perhaps considering some of the regional areas.
Speaker 3: I'm not sure, but I was really surprised to see that.
Speaker 3: I think from a capital value perspective, in a lot
Speaker 3: of the regional areas, we're starting to see or we're
Speaker 3: certainly seeing a lot more supply in those sorts of
Speaker 3: markets now. There's been a bit of a change of
Speaker 3: tax when you go back to pandemic times, as I
Speaker 3: think you said earlier, and it was hard to even
Speaker 3: find anything to rent or buy in a lot of
Speaker 3: the regional markets at the time. The supply was that tight,
Speaker 3: and people were just looking to get out of capital
Speaker 3: cities into those sorts of areas. Whereas you move into
Speaker 3: a lot of those locations now and there's a lot
Speaker 3: more choice and there's a lot more flexibility. So for
Speaker 3: buyers that are looking to enter those markets, they are
Speaker 3: in a much stronger position than perhaps what they were
Speaker 3: a couple of years ago.
Speaker 1: Yeah, I mean, there could be a couple of different
Speaker 1: explanations for it. Of course, because prices have risen so
Speaker 1: much over the last four or five years in those regions,
Speaker 1: maybe it pushes a lot of potential buyers out into
Speaker 1: that rental market, and therefore there's a greater demand from renters.
Speaker 1: I think in Victoria, like if I was taking guess
Speaker 1: the land tax and the additional property taxes probably mean
Speaker 1: more investors have sold their properties in those regions, and
Speaker 1: so the supply of rental property in that in those
Speaker 1: locations may be decreasing. You know, you gave some really
Speaker 1: great advice again to buyers and sellers in the spring
Speaker 1: property marketing when we sort of focused on capital cities.
Speaker 1: Does your approach change at all in regional markets, either
Speaker 1: as a buyer or seller, You're.
Speaker 3: Probably in a stronger position as a buyer in a
Speaker 3: lot of the regional markets. Typically you find that supply
Speaker 3: is stronger than demand in most of those areas, and
Speaker 3: it's typically why in a lot of regional areas the
Speaker 3: most common method of sale is private sale as opposed
Speaker 3: to auction. The auction method works best when demand outstrips supply.
Speaker 3: You also find from a buyers perspective, it's far more
Speaker 3: common to be making conditional offers, whether that's in relation
Speaker 3: to finance or building inspections, or even in some circumstances
Speaker 3: condition upon the sale of another property is more common
Speaker 3: as well. So as a buyer, it's a bit like
Speaker 3: you mentioned before, Stuart, there's more leavers that you can
Speaker 3: pull and you can use to your so you work
Speaker 3: things a bit harder. Again, I think you've still got
Speaker 3: to be a little bit careful of being too cute
Speaker 3: in some areas and making sure that you're not pushing
Speaker 3: too hard, but you've certainly got options available to you.
Speaker 1: I think it's property people interested in property, of course,
Speaker 1: that's the listener base for this podcast, and property owners.
Speaker 1: We can kind of learn a little bit from what
Speaker 1: happens in a softer market, particularly those for those wanting
Speaker 1: to get into those other markets that they're running quite hot.
Speaker 1: So are there any sort of property types or sort
Speaker 1: of geographical locations that are performing better in this softer
Speaker 1: market in Melbourne than others? And what I'm thinking is
Speaker 1: can we sort of take those learnings and apply them
Speaker 1: in other markets.
Speaker 3: What we're noticing at the moment it goes back to
Speaker 3: probably what I said earlier about the stronger properties at
Speaker 3: the moment and those that are turnkey that are ready
Speaker 3: for people to move straight into.
Speaker 2: So we're still seeing a reasonable amount.
Speaker 3: Of people or the buyers that are in the market
Speaker 3: are either first home buyers or they're looking to upgrade
Speaker 3: or downsize, and there's a real want for those that
Speaker 3: are upgrading they possibly consider doing a renovation or extension
Speaker 3: on an existing home. But the uncertainty around the building
Speaker 3: sector and things just as it doesn't lend itself to
Speaker 3: that being the preferred option. So we're seeing more so
Speaker 3: and as a result of that, people don't they want
Speaker 3: to buy the property that's already renovated and ready to go.
Speaker 2: So we're seeing a lot more of that. Now.
Speaker 3: That's not necessarily across the board all the time, but
Speaker 3: that is in a softer market, you're finding it, and
Speaker 3: at the moment, with the concerns, that's probably where things
Speaker 3: are a bit stronger.
Speaker 1: I guess if you're a really strong market, that could
Speaker 1: be one way to kind of mitigate risk. Well, I
Speaker 1: mean it's a question rather than the statement that is
Speaker 1: by a property that needs a bit of capital improvement kitchen,
Speaker 1: bathroom and so forth. By doing that, not only do
Speaker 1: you get the depreciation benefits, maybe a bit of an
Speaker 1: uplifting capital value hopefully and then improvement in rental yield.
Speaker 1: Is that the approach you might take in a stronger market.
Speaker 2: Terrek, particularly if you've got the appetite for it.
Speaker 3: I mean, we've got and I'm sure you've had two
Speaker 3: clients that just do not want to have to even
Speaker 3: consider dealing with that space. But those that are even
Speaker 3: remotely open to doing cosmetic works those sorts of things,
Speaker 3: I think that there's absolutely opportunities to take advantage of
Speaker 3: that at the moment, because there's a lot of buyers
Speaker 3: that don't want to so, and even more so, if
Speaker 3: you've got a skill set to be able to add
Speaker 3: to that, whether it's because you're a trade or you've
Speaker 3: got a family member or a friend who is and
Speaker 3: can do things on an ad hoc basis and help out,
Speaker 3: then I think that's certainly an opportunity at the moment.
Speaker 3: And also, as you and I've spoken about plenty of times,
Speaker 3: it means that your purchase price is going to have
Speaker 3: a much higher land to value ratio as well, because
Speaker 3: the improvements are going to be adding less to that
Speaker 3: title component. So the more land component or land value
Speaker 3: you can have in that purchase. If you're buying the
Speaker 3: right property, the growth is going to be stronger, and
Speaker 3: so then you can add value from an improvement's perspective,
Speaker 3: as you said, improve the rental and then it works
Speaker 3: well for you going forward.
Speaker 1: And I'm really interested to know the rise of work
Speaker 1: from home, and I think it's really here to stay.
Speaker 1: Maybe not to the same extent that it was so
Speaker 1: prevalent during the lockdowns, of course, but I think most
Speaker 1: large corporates are getting to mandating three to four days
Speaker 1: in the office, but there's still maybe one day at
Speaker 1: least at home working from home. Does that impact us
Speaker 1: as investors in terms of the types of property we
Speaker 1: might want to invest in, do you think, Jared?
Speaker 3: I think it's probably less from a geographic sense. I
Speaker 3: think the geographical side of things is probably more finding
Speaker 3: a level and people are sort of getting understanding as
Speaker 3: to what is possible and not. But I think from
Speaker 3: an accommodation point of view, I think that certainly starts
Speaker 3: to play in. And I mean it's as simple as
Speaker 3: might helped the client sell a one bedroom apartment recently,
Speaker 3: and it was something that he'd held for a long
Speaker 3: period of time. It had it as a home initially,
Speaker 3: and there was a little alcove in one corner of
Speaker 3: the entry hall and just to be able to and
Speaker 3: it wasn't set up that way, but we were able
Speaker 3: to set up a little desk to put in the
Speaker 3: corner to create a work from home environment, and that
Speaker 3: was the purchaser.
Speaker 2: That was the key.
Speaker 3: One of the keys for them was the fact that
Speaker 3: it had not a massive one bedroom itself, but the
Speaker 3: living space was really good at a nice balcony, but
Speaker 3: that little al cove gave them the feel of Okay, well,
Speaker 3: I've got my own work from home space that i
Speaker 3: can work with and that's really going to give me
Speaker 3: what I need, even though it's onety a one bedroom apartment.
Speaker 3: So I do think that specific accommodation to have that,
Speaker 3: whether it's a proper study, whether it's a studio at
Speaker 3: the back, I think having that dedicated space is certainly
Speaker 3: becoming more and more sought after.
Speaker 1: And unfortunately we're running a bit short of time. But
Speaker 1: I really did want to ask you kind of if
Speaker 1: we split up your time period between sort of pre
Speaker 1: and post COVID, how has it changed your business, Jarry,
Speaker 1: because I think this gives listeners a really good sense
Speaker 1: of what's happening on the ground at the call face
Speaker 1: in terms of the activity in the market.
Speaker 3: Now.
Speaker 1: I know you obviously operate in Melbourne, but has your
Speaker 1: business changed And I guess I'm thinking in terms of
Speaker 1: investors versus own occupiers and purchases versus sales. How has
Speaker 1: it changed over time.
Speaker 2: Yeah, it's a really good question.
Speaker 3: I'd go back, probably even further than the pandemic to
Speaker 3: probably the Royal Commission, and I'd say that's probably when
Speaker 3: it started to switch in terms of the percentage of
Speaker 3: investors that we've been dealing with versus owner occupiers. That's
Speaker 3: from an acquisition point of view, but that's certainly we
Speaker 3: noticed a change from then. Went further during the pandemic
Speaker 3: and Victoria particularly at the moment. We don't need to
Speaker 3: go into too much detail, but there's certainly not a
Speaker 3: lot of encouragement for investors down this way at the moment,
Speaker 3: and I think that's leading to a lot of sales
Speaker 3: at present, and so there's a lot of investors leaving
Speaker 3: the market. I think it will change eventually. As I
Speaker 3: said before, I legitimately do think there's some really good
Speaker 3: opportunities to be had down in Victoria at the moment
Speaker 3: from a buying point of view, but there's not a
Speaker 3: lot of incentives to own investment property. So we've seen
Speaker 3: that from an owner occupier to investor in terms of
Speaker 3: vendor advisory versus buying services. Even in the last twelve months, Steward.
Speaker 3: I've noticed we had I would say that probably of
Speaker 3: our work seventy percent to thirty percent was by to
Speaker 3: sell this.
Speaker 2: Time last year.
Speaker 3: I'd say it's almost the reverse of that at the
Speaker 3: moment in terms of what we're doing. And there's a
Speaker 3: lot more vendor advisory work. And that's not just investors.
Speaker 3: There are a few, but there's a lot of others
Speaker 3: that are just upgrading and downsizing homes as well. So
Speaker 3: I'm not suggesting that it's predominantly, but there are a
Speaker 3: lot of we are seeing investors that are considering their
Speaker 3: position absolutely.
Speaker 2: Yeah.
Speaker 1: Okay, that's really interesting. Okay, we're going to take another
Speaker 1: short break, and when we return, I'm going to ask
Speaker 1: Jared a question from a listener about buying commercial property.
Speaker 1: So we'll be back with you at a moment. Hello, Welcome
Speaker 1: back to the Australians Money Puzzle podcast. I'm Stuart Weens
Speaker 1: talking to Jared McKay, buyers agent and owner of Wakeland
Speaker 1: Property Advisory. If I can be a little cheeky Jared,
Speaker 1: before we get into a listener question from James, I'd
Speaker 1: like to ask you one final question. If you could
Speaker 1: meet yourself fourteen years ago, when you started buying property
Speaker 1: as a buyers agent, what are the two to three
Speaker 1: most important lessons you would tell yourself about buying property?
Speaker 3: I would probably say, And Richard Wakelan and Paul Nugent
Speaker 3: drilled this into me from the very start. The importance
Speaker 3: of asset selection, which everyone knows that buying the right property.
Speaker 3: Everyone wants to do that, but sometimes the emotion can
Speaker 3: get the better of people when buying property. So the
Speaker 3: importance of taking a step back and understanding why you're
Speaker 3: buying it, what's the purpose of buying it, and then
Speaker 3: making sure you buy the right property first and foremost.
Speaker 3: I think that was probably the first thing. I think
Speaker 3: something that's probably come to light a bit more in
Speaker 3: recent times, and again it's something that Richard always has said,
Speaker 3: but is that the things that you can't predict can
Speaker 3: quite often have the greatest impact. So things like the
Speaker 3: GFC you couldn't see that coming. Now again that there
Speaker 3: was the movie about the short selling things. Some will
Speaker 3: claim that they did the Royal Commissi in the pandemic.
Speaker 3: Some of these sorts of things have had the biggest
Speaker 3: influence on the market, as opposed to some of the
Speaker 3: smaller things that we can get quite worked up about
Speaker 3: around negative gearing and how that was going to be
Speaker 3: the biggest risk to everything. I mean, going back further,
Speaker 3: I know from my valuation days that the GST was
Speaker 3: going to be the.
Speaker 2: End of it.
Speaker 3: Then. So there's all these little things that people get
Speaker 3: worked up about. But it's I've typically notice that it's
Speaker 3: the bigger things that cause the biggest issues, and you're
Speaker 3: most likely tart predict them.
Speaker 2: Yeah.
Speaker 1: Yeah, I mean it's the same wins in stock markets.
Speaker 1: The thing that's going to create the next stock market
Speaker 1: crash is by definition unexpected, otherwise the market would price it.
Speaker 1: I think that's really good. Okay, we're going to take
Speaker 1: a question from a listener. Now it's from James. I'll
Speaker 1: read it out Jared, and then I'll give you the
Speaker 1: difficult task of answering it. So, James writes, I love
Speaker 1: the podcast and just had a quick question. I recently
Speaker 1: looked at buying some commercial property in my local area.
Speaker 1: A standard one hundred to two hundred and twenty square
Speaker 1: meter concrete block type property popping up everywhere. Nothing fancy
Speaker 1: about them. I'm assuming James is referring to sort of
Speaker 1: an industrial style shared property anyway, James writes the price
Speaker 1: was around six hundred and forty five thousand dollars, but
Speaker 1: the bank valued at four hundred and fifty thousand dollars,
Speaker 1: which I agree with the bank. How do developers get
Speaker 1: away we're still trying to charge above bank market rates
Speaker 1: if they're not valued at that, especially when we can
Speaker 1: physically see they're not being sold.
Speaker 3: It's a really good question, James, And it's something that
Speaker 3: we discuss a lot and it's not actually really probably
Speaker 3: just a commercial industrial it's really an off the plan
Speaker 3: type question. So the same thing applies with residential property
Speaker 3: in the sense of apartments down now as is that
Speaker 3: sort of thing, and it's really the developer's premium that
Speaker 3: gets put in on top in order for them to
Speaker 3: make their profit.
Speaker 2: The best analogy I can.
Speaker 3: Give you is the buying of a brand new car
Speaker 3: and you drive it out of the door, out of
Speaker 3: the lot, and all of a sudden it depreciates in
Speaker 3: value because if someone wants something similar, they can go
Speaker 3: by the brand new version themselves, so the value is
Speaker 3: dropping straight away.
Speaker 2: The bank's valuation is really interesting too.
Speaker 3: Again, my background before getting into buying services was as
Speaker 3: a valuer. And the valuation assessments won't take into account
Speaker 3: off the planned sales. They will want to see resales
Speaker 3: of similar type properties in and around the area, So
Speaker 3: it's reflecting market forces as opposed to reflecting the developers'
Speaker 3: premium being paid. So the fact, because there's always someone
Speaker 3: that wants the brand new, wants something, wants that type
Speaker 3: of property or car, there's always going to be a
Speaker 3: market for that, and they'll pay the premium for it.
Speaker 3: But those that are smart take that off and don't
Speaker 3: necessarily need to have that, particularly when you're looking at
Speaker 3: it from a long term perspective, you're better off getting
Speaker 3: the property that's on the resale a year or two later,
Speaker 3: getting the same benefits that the other one offers, and
Speaker 3: not having to pay for it in the meantime.
Speaker 1: Yeah, the analogy I would use, Joe, because a lot
Speaker 1: of our listeners invested in both property and shares. The
Speaker 1: analogy I would use is the off the planned property
Speaker 1: sale is like buying an unlisted company, Whereas when you
Speaker 1: buy a listed company, it's got that price discovery. It's
Speaker 1: regularly traded, so you know what the market thinks it's worth,
Speaker 1: whether it's worth that can be a completely different question,
Speaker 1: but something that's never traded before, like an off the
Speaker 1: plan property. It's more difficult, I guess to ascertain value. Well,
Speaker 1: that's been a really great conversation, Jared, thanks so much
Speaker 1: for sharing your years and years of experience with our listeners.
Speaker 1: I'm sure they've enjoyed it. And just a reminder, folks,
Speaker 1: if you have any question or feedback, we'd love to
Speaker 1: hear from you. The email address is the Money Puzzle
Speaker 1: at the Australian dot com dot au. Keep the questions coming.
Speaker 1: We've got James Gerard filling in for James Kirby on Thursday,
Speaker 1: and I'll be back with you next Tuesday, and we
Speaker 1: have another very interesting discussion lined up. I'll be talking
Speaker 1: about the state of the investor market around us. Jared
Speaker 1: and I already sort of touched on this, but surprisingly
Speaker 1: the Australian Bureau Statistics reported that invest alone volume is
Speaker 1: up over thirty five percent over the past year, which
Speaker 1: is pretty surprising given the backdrop of higher interest rates,
Speaker 1: higher property taxes and more stringe and tendency rules. So
Speaker 1: we'll be exploring that. I really hope you've enjoyed today's
Speaker 1: episode and if you have please share it. I've been
Speaker 1: Stuart Wiams and until next week by for now,